The beginning of 2007 will see the arrival of a new version of a widely used computer operating system (OS). This latest version will see many new advances over the current editions, and is likely to be quickly adopted in the coming months. This isn’t Windows Vista, the long-awaited update of Microsoft's flagship computer operating system.

This new much-heralded update is actually based on Linux, the open-source operating system. The major launch is Red Hat Enterprise Linux 5, expected to be commercially available in January. That will be followed soon after by Open Enterprise Server from Novell.

And while Linux is still trailing Microsoft’s computer OS in overall popularity, it has a higher growth rate while coming from a small base, according to George Weis, an analyst with Gartner Inc., a Stamford, Conn. research firm.  Much of this growth is coming in computer servers, popular with some small and mid-size businesses that deal in a high volume of data over a network. “The two OS for the server in the future will be Linux and Windows," Weis says. "Linux is an economical cost-justified OS for the X86, Intel-compatible platform, and the benefit of Linux over Unix is really closing.”

Linux has about $8 billion in annual revenue from server shipments, which is expected to grow to about $13 billion by 2011, according to a Gartner forecast. At the same time, Microsoft’s Windows will likely raise $22 billion in revenue from servers over the same time. But the interesting factor is that the $13 billion in revenue for Linux is in a market for what many people consider free software.

History of Linux

Linux isn’t a new phenomenon. Linux was developed in the early 1990s as an alternative to an OS called MINIX, itself an alternative to Unix. Linus Torvalds, then a student at the University of Helsinki, wanted to develop something that was both free and open. The result was Linux. During the past decade, software has maintained cult popularity, offering a desktop alternative to Windows or the Apple OS. But its real power as been on the server side.

Linux, at its core, was designed to be developer-friendly, and as a result grew with the development of the World Wide Web in the mid-1990s. Nicholas Petreley, editor-in-chief of the Linux Journal, says the OS has a bit of a dubious past. “It was a popular Web server for pornographic websites," he says. "It was free and stable, and this proved it was a reliable Web server.”

At the same, Linux started being used because it could emulate a Windows file and printer server, and many IT departments essentially “snuck in” the OS to save money, says Petreley. “Once Oracle and IBM supported Linux, it came out of the closet," he adds. Now, he estimates that 80 percent to 90 percent of businesses use Linux in some way.

Business uses of Linux

There are different ways that Linux can be used in the small and mid-size business environment: in desktop PCs, servers (such as e-mail servers), and on workstations (such as graphic workstations). Companies need to undertake cost analyses to figure out whether a move to Linux in any of those categories makes economic sense -- figuring out the costs associated with upgrading, any new licensing fees and finding technical staff that can shepherd the changeover.

However, one of the great misconceptions about Linux is that businesses can just run it for free. While there are plenty of free downloadable versions, most small and mid-size businesses still pay for commercially-available versions that feature the traditional tech support you’d find with Windows or even Unix.

For business use, the main downside of using Linux is simply application availability, says Gary Chen, a small business IT analyst with the Yankee Group, a Boston-based research firm. “An OS isn’t really useful without apps to run on top of it. Linux has some good applications but there still exist major holes and in some areas there isn't the amount of choice as for Windows," Chen says. "This is changing, but building an ecosystem that can rival the Microsoft system will certainly take a lot of time.”

In addition to commercially-available server packages from companies such as Novell and Red Hat, there is a growing body of open-source software available for free that can help a small business develop Web services, host databases, and provide network monitoring. In this respect, Linux is a very solid choice for a small company with a small information technology budget, or a larger company trying to shrug off some painful licensing fees.

Another attribute of Linux is that it is generally virus free, and many long time users speak highly of how it seldom crashes. Of course, with every silver lining there may be clouds. Most notably says Petreley, “There is no one to hold financially responsible should you have problems.”